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The Competition and Consumer Protection Commission (CCPC) has approved a payments app developed by Ireland’s retail banks to compete with fintechs following a 14-month investigation.
The CCPC has confirmed that Ireland’s largest high-street banks, such as Allied Irish Bank and Bank of Ireland, can proceed with their mobile payments app, Yippay, which is managed by a bank joint-venture company, Synch.
The mobile payments service will be available to customers of banks and other financial institutions that choose to participate in Synch. As such, the service will not be exclusive to its founding members but be made available to other financial institutions that wish to join the scheme.
Through its smartphone app, Synch will facilitate instant payments for e-commerce and in-store through the use of QR codes, to allow consumers to pay for goods and services.
Similar types of mobile payment services are already available in many other countries in the European Union, such as iDEAL in the Netherlands and Bizum in Spain.
Following notification to the CCPC in April 2021, the competition regulator carried out a preliminary investigation of the proposed joint venture and concluded that a full investigation was required to establish if it could lead to a substantial lessening of competition in the country.
This was after the project saw its original submission to the CCPC rejected in January 2021 for a lack of detail.
The full investigation identified a number of preliminary competition concerns, according to the regulator. This included concerns that, given that the founding shareholders represent a large combined share of the Irish banking sector, the joint venture could be a means of foreclosing potential new competitors from entering the market for the provision of banking products and services, for example by denying or delaying access to a licence to participate in the mobile payments service.
The CPCC was also concerned that the establishment of Synch could lead to the stifling of innovation in mobile payments services, either through the ability of the founding shareholders to influence decisions regarding future innovation within the joint venture itself or through a reduced incentive to develop other services.
Synch allays regulator concerns
In response to the CCPC’s preliminary competition concerns, the parties proposed to make a number of binding commitments to the CCPC. This included setting out objective eligibility criteria for any bank or other financial institution that wish to become a participant in the Synch mobile payments service.
The stakeholders have also set out defined timelines for processing new applications by prospective licensees.
In due course, Synch has said it will also support interoperability by providing access to a software development kit. This will allow licensees to embed certain mobile payments functionalities within their own apps.
A governance structure, including independent board members, will also be put in place, allowing Synch to operate with a greater level of independence from the founding shareholders and substantial safeguards to prevent the exchange or disclosure of commercially sensitive information.
As well as this, founding shareholders will be required to report to the CCPC on their compliance with the commitments on an annual basis.
The banks collaborative initiative has been viewed by some in the press as a reaction to the rise of fintech platforms, such as Revolut, which Irish consumers have flocked to in recent years.
Revolut, which has 1.7m customers in Ireland, has according to one payments expert become a “verb” in the country, VIXIO reported in February.
In particular, the COVID-19 pandemic proved a catalyst for the success of the payments platform, as people shifted away from cash.
And in August 2020, Revolut was one of the first banks to launch SEPA Instant credit transfers in Ireland, getting the jump on traditional Irish banks.
